FLASH NEWS
Government borrowing in the domestic market will decrease further in the last quarter
2023-09-18 14:43:39 / EKONOMI&SOCIALE
Government borrowing in the domestic market is expected to decrease further in the last quarter of the year.
According to the borrowing calendar of the Ministry of Finance and Economy, the amount programmed to be financed in the domestic market, (including the refinancing of matured instruments) will have the value of approximately 80 billion lek, decreasing by 3.6% compared to the third quarter and down by 4.2% compared to the same period a year ago.
The decrease will be particularly pronounced for the month of December, when the Ministry of Finance and Economy has planned total borrowing in the amount of 16.5 billion lek, 42% less compared to December last year.
During this year, the government has used the most favorable financing conditions offered by the insider to secure most of the planned annual borrowing. In fact, in the first half of the year borrowing was even higher than that predicted in the calendar, thanks to the high market demand for government debt instruments and falling yields.
Also, in June of this year, Albania also issued the next Eurobond of 600 million euros in the international markets. This amount will be used partly to cover this year's budget deficit and partly to repay part of the previous Eurobond, which is expected to mature in 2025.
The state of the state budget from the data so far is in an extended surplus, with about 45 billion ALL by the end of the 7th month. The surplus has even increased by about three times compared to the same period a year ago. As usual, it is expected that the entire planned annual deficit will be spent in the last months of the year.
A lower government demand for funding is in theory a factor that keeps upward pressure on yields low. The yields of domestic borrowing instruments followed a downward trend during the first half of this year, while they were relatively stable during the third quarter. Only during the month of September, some signals were observed for the increase in yields, but only in long-term instruments, mainly 5-year and 7-year bonds.
For the last quarter, the market is waiting for new signals that will come from the Bank of Albania. So far this year, the central bank has raised the basic interest rate only once and it currently stands at 3%, among the lowest in Europe. Such a level of the base rate, despite the inflation that remains above the target, is mainly explained by the strengthening of the Lek in the exchange rate, but also partly by the restrictive fiscal policy that the Albanian government has followed./ Monitor.al
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